The successful introduction of gold coins, which the Reserve Bank of Zimbabwe (RBZ) intends to issue on 25 July, could be hampered by a lack of public trust in the country’s monetary system, according to analysts.
The central bank said the gold coins, named Mosi-oa-Tunya (The Smoke That Thunders), after the Victoria Falls, will serve as a store of value as an alternative to the US dollar and also stabilise the Zimbabwe dollar.
However, analyst Rashweat Mukundu told The NewsHawks that a lack of public confidence in monetary authorities could derail the new measures. Mukundu said:
The key issue with the Zimbabwean economy is a lack of trust. This is the first time Zimbabwe is initiating the preservation of value by selling gold coins.
The question is: Has enough been done to educate the public on the purchase of the gold coins?
There is a huge lack of trust in the monetary authorities and the banking sector.
There is a clear lack of knowledge among the general populace on what the gold coins mean and whether they can trust the same system with their money that has cheated them repeatedly over the years.
The loophole is in terms of trust then there is no explanation as to whether it appreciates in value, how long does it take to redeem it?
It is a very hurried move to create diversion on its failure to contain inflation.
A foreign currency trader in Harare, Terrence Musareka (35), fears the introduction of gold coins will negatively affect their business. He said:
On top of the mistrust we have with the monetary system, which has changed overnight over the years, our foreign currency trading could be under threat if everyone goes for these gold coins.
Broadwell Masuku, a 64-year-old pensioner who lost his saving in 2008, said it is difficult to trust the government with money. Said Masuku:
They must promise the public that there will be the restitution of money lost if there is a loss of money or value.
When you are buying this thing, you are literally exchanging your money in exchange for a paper, surely our government must operate on a higher moral standard and give people what is due to them.
Central bank governor John Mangudya said the gold coins can be converted into cash and traded locally and internationally at a price based on the prevailing international price of gold and the cost of production.
Economist Prosper Chitambara said the introduction of gold coins may not arrest inflation which was at 192% last month.
He, however, said the use of gold would help restore confidence in investing in the economy as gold remains a stable commodity.